You will now receive updates fromAM & PM Update Newsletter

AM & PM Update Newsletter

In other parts of the transcript, Mr Baryalei talks about killing five people a month. He also allegedly tells Mr Azari to recruit two to three "brothers" - "heavy duty boys with perfect faith".

"If you kill our people we will kill your people one by one," Mr Baryalei allegedly says.

In opposing bail, Mr Neil said: "There is no question there is strong evidence of an agreement in which the applicant [Azari] will either by himself or with others pick some random member of the community at random, kill them, cover them with the Islamic State flag, film it and send it to Mr Baryalei."

PM 'threatens fair trial'

Earlier at the hearing, lawyers for Mr Azari said he could never get a fair trial because of Prime Minister Tony Abbott's "unprecedented interference" in the case.

At the time of Mr Azari's arrest, several reports said the plot allegedly involved selecting and murdering a random member of the community in a public place and draping them in an Islamic State flag while others recorded the crime on video. Mr Abbott said intelligence indicated people in Australia were allegedly planning a public beheading to be carried out in the name of Islamic State.

Mr Azari was charged with conspiring to plan or prepare a terrorist act. He has been held in segregation in Goulburn's Supermax prison ever since.

Mr Azari applied for bail on Tuesday with his lawyers claiming "exceptional circumstances" could be established.

His barrister, Steven Boland, said comments made by Prime Minister Tony Abbott in the days and weeks after the counter-terrorism raids were an "unprecedented interference in the criminal justice process".

"The people of Australia have been told there is a plot to behead somebody randomly. It's made up, your Honour," Mr Boland said.

Mr Azari's lawyers had tried to correct the public perception of a beheading plot in his court appearances since his arrest but they were up against comments made by the "highest office" in the country.

It may not be possible for Mr Azari to receive a fair trial by jury, Mr Boland said, foreshadowing a stay application at a future point.

Magistrate John Andrews declined to view a folio of media clippings of Mr Abbott's comments.